Factory, services output rose fastest in three months in February: S&P
India's manufacturing and services sectors both accelerated in February 2026, with both indices reaching their fastest pace of expansion in three months, according to S&P Global India PMI data
The HSBC India Manufacturing PMI rose to 56.9 in February 2026 from 55.4 in January — a four-month high — driven by strong domestic demand and rising new orders
The Composite PMI (combining manufacturing and services) climbed to 59.3 in February from 58.4 in January, reflecting broad-based economic momentum
Input cost inflation climbed at the steepest pace in 15 months, pushing selling prices to a six-month high, raising concerns about potential pass-through to consumer prices
New export orders growth slowed to a 17-month low even as domestic orders remained robust, signalling some softening in external demand amid global trade uncertainties
Employment expanded at the fastest pace in four months as firms hired to cope with rising workloads
Purchasing Managers' Index (PMI): Concept and Significance
The Purchasing Managers' Index (PMI) is a monthly survey-based diffusion index that measures the economic health of the manufacturing and services sectors. It is compiled by S&P Global (formerly IHS Markit) in India in partnership with HSBC. Respondents — purchasing managers at private-sector companies — are asked whether conditions improved, deteriorated, or remained unchanged across five components: new orders, output, employment, supplier delivery times, and input stocks. The index ranges from 0 to 100, with 50 as the neutral threshold.
Key Details
- Above 50: expansion (more respondents reporting improvement than deterioration)
- Below 50: contraction
- India Manufacturing PMI (Feb 2026): 56.9 — four-month high
- India Composite PMI (Feb 2026): 59.3 — combining manufacturing and services
- PMI is a leading indicator (published monthly, early in the following month) and often precedes GDP data releases
- Published by: S&P Global in partnership with HSBC for India
- Indian PMI surveys cover ~400 manufacturing and ~400 services companies
India's PMI readings consistently above 55 since 2023 signal sustained economic expansion in the private sector, aligning with official GDP growth projections of 6.7–6.8% for FY2026.
India's Manufacturing Sector: Structure and Policy Context
India's manufacturing sector contributes approximately 16–17% of GDP, well below the government's target of 25% under the Make in India initiative (launched 2014). The sector spans traditional industries (textiles, food processing) and high-growth segments (electronics, pharmaceuticals, defence). The Production-Linked Incentive (PLI) scheme — covering 14 sectors with total outlay of Rs 1.97 lakh crore — is the flagship policy aimed at boosting manufacturing output and exports.
Key Details
- Manufacturing's share of GDP (FY2024-25): ~16–17% (target: 25% under Make in India)
- PLI scheme: 14 sectors, total outlay ~Rs 1.97 lakh crore; launched 2020-21
- Index of Industrial Production (IIP): official monthly measure of manufacturing output; base year 2011-12
- IIP covers: manufacturing (77.6%), mining (14.4%), electricity (8%) by weight
- Strong PMI (56.9 in Feb 2026) supports the RBI's assessment of continued economic momentum
The PMI's new orders and output sub-indices rising together confirms that manufacturing demand is genuinely strengthening, not just price-driven, reinforcing the case for private capex acceleration.
Services Sector PMI and India's Services Economy
India's services sector — contributing ~55% of GDP — is the dominant driver of economic growth and employment at the formal level. The Services PMI surveys financial services, insurance, real estate, IT/business services, and hospitality companies. India's services PMI has remained in strong expansion territory (above 58) for most of 2024-2025, driven by IT sector resilience, financial services growth, and strong domestic consumption of services.
Key Details
- Services sector share of India's GDP: ~54–56%
- India Services PMI: consistently above 58 in late 2025 – early 2026
- Composite PMI (Feb 2026): 59.3 — one of the highest globally among major economies
- Key concern from February data: input cost inflation at 15-month high may squeeze margins and filter into CPI
- Employment sub-index rising: consistent with India's formal services employment expansion
The strong Services PMI reinforces the narrative that India's domestic demand-led growth is intact even as global trade faces headwinds from tariff conflicts, providing a buffer for the overall economy.
- Manufacturing PMI (Feb 2026): 56.9 (up from 55.4 in Jan; four-month high)
- Composite PMI (Feb 2026): 59.3 (up from 58.4 in Jan)
- PMI threshold: 50 = neutral; above 50 = expansion; below 50 = contraction
- Input cost inflation: steepest in 15 months
- Selling price inflation: six-month high
- Export orders growth: slowest in 17 months
- Employment growth: fastest in four months
- Survey conducted by: S&P Global (in partnership with HSBC for India)
- PMI is a leading indicator; published monthly within 7 days of month-end